Ever since the coronavirus landed on American shores, each day seems to bring more devastating news about the state of our economy. With all this uncertainty, it’s easy to fall into a panic and wonder if financial ruin is on the horizon. However, worrying about it is as effective as changing a tire with a shoe. The best way to approach the unknown is to make sure you’re taking proper precautions to protect your personal finances during this time.
Here are some of the many economic impacts the coronavirus has caused.
- Businesses are closed
- Schools are shut down
- Many large companies have shut down major parts of their operations
- Many Americans are no longer bringing home a monthly paycheck
Here are some practical ways you can prevent this health crisis from becoming a financial crisis.
Don’t panic buy
There's a very real chance the U.S. will become the next epicenter of the coronavirus, which may trigger within you a sudden urge to buy enough supplies to last you through the summer. It's perfectly reasonable to stock up in anticipation of having to isolate yourself for a while, but don’t panic buy. Louisiana issued a “stay at home” order that allows residents to leave the house for essential work and travel, which includes going to the grocery store, pharmacy, or bank. To avoid overbuying, ask yourself, “am I buying this because I’m anxious?”
When prepping for an emergency, only spend the money you have available (i.e. cash in your wallet and money from your checking account). You definitely don’t want to be on the hook for large purchases if your monthly income is hurting.
Trim your spending
As the economy heads toward a probable recession, start identifying ongoing expenses you can realistically live without. Work bonuses, raises and promotions are not handed out as freely during a recession as they were in recent years. Some people may even find themselves without a job. Trimming discretionary spending now can be good practice for making it through the month on a smaller income. Start by doing an audit of your subscription-based services and calculating how much you can save per month without them.
Related article: How much are you actually paying for your monthly subscriptions?
Take advantage of online and mobile banking
One of best ways to practice social distancing is to reduce time spent in public (and at the branch). Use your credit union’s e-service products to stay on top of your finances from the safety of your home. Louisiana FCU offers user-friendly online and mobile banking for quick access to your accounts. Seriously, don't stay home without it.
Beware of scams
Scammers are notorious for capitalizing on fear. In the midst of the coronavirus outbreak, fraudsters are doing things such as setting up fake websites, bogus funding collections and using fake emails or text messages to try and obtain personal data. As with most scams, the best weapons against these traps are awareness and education. It’s a good idea to learn about circulating scams so that you can identify them if you’re targeted.
Related article: Scammers are exploiting coronavirus fears for profit
Don’t let your emotions affect your investments
Both seasoned investors with robust portfolios and those simply worried about their retirement accounts can find it nerve-racking to see their investments drop in value by as much as 10% a day. It may seem like a smart idea to sell out just to spare investments from further loss, but financial experts say otherwise. According to The Motley Fool, most sectors of the economy will recover quickly as soon as the outbreak clears. For example, consumers may not be purchasing shoes or cruise tickets now, but they will likely do so when it is safe to shop and travel again. While the global and national economy may not bounce back for a while, experts are hopeful that individual business sectors will recover quickly.
Put your tax refund toward your emergency fund
Your tax refund may be one of the biggest checks you receive all year. Instead of spending it, consider putting it into an emergency fund as a fallback during challenging times. Once the chaos dies down, you can always move it, invest it, or keep it in savings.
Don’t value money over health
Financial wellness is important, but physical health should always take priority. If you’re feeling unwell, and especially if you’re exhibiting any of the symptoms of the coronavirus — such as fever, coughing and shortness of breath — call in sick to work. Do the same if you’ve been exposed to someone who has tested positive for COVID-19 in the past 14 days. Don’t let financial considerations come before your health and the health of those you come into contact with each day.
Similarly, doctor visits can cost a pretty penny, but when necessary, should always outweigh financial concerns. A co-pay or insurance deductible is a small price to pay for your health.
Health crisis or not, there’s never a bad time to review your money situation and making it stronger. If you need additional assistance, request a call from one our financial experts for advice, resources, and more.
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